On Our Radar

On Our Radar

GM Earnings Dragged Down By Recall Costs

General Motors (GM) unveiled a first-quarter profit that tumbled 88% but still beat Wall Street expectations by a wide margin, as an effort to scale back incentives partially offset costs tied to recent recalls.

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The nation’s largest automaker said Thursday its net income checked in at $108 million, or six cents a share, compared to $873 million, or 58 cents a share, in the year-ago period. Excluding preferred dividends, earnings fell to $213 million from $1.18 billion.

Adjusted earnings of 29 cents a share easily topped the consensus estimate of four cents. Non-GAAP results included special items of 23 cents a share, primarily related to the devaluation of Venezuela’s currency.

The Detroit-based company took a previously disclosed $1.3 billion charge, or 48 cents a share, in the first quarter to cover recall expenses. GM has spent about $700 million on replacement ignition switches and cylinders, plus $600 million on other recall items.

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GM stressed its underlying performance remained strong, citing demand for new vehicles and higher selling prices.

“The performance of our core operations was very strong this quarter, reflecting the positive response of customers to the new vehicles we are bringing to market,” Mary Barra, who took charge of GM as chief executive in January, said in a statement.

During a meeting with reporters, company officials said the average price across GM’s entire lineup was up $2,000 year-over-year to $32,794, according to multiple news reports.